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Compulsory Arbitration Appeal—Sanctions

Posted by Ted A. Schmidt | Apr 04, 2019 | 0 Comments

Apodaca v. Keeling, __Ariz. Adv. Rep.__, No. 1 CA-CV 18-0416 (App. Div. I, March 19, 2019) (J. Howe) https://www.azcourts.gov/Portals/0/OpinionFiles/Div1/2019/CV%2018-0416.pdf

WHERE A SINGLE COMPLAINT IS BROUGHT IN A SINGLE LAWSUIT COURT MUST EVALUATE WHETHER DEFENDANT OBTAINED A RESULT 23 % MORE  FAVORABLE THAN ARBITRATION AWARD BASED UPON TOTAL VERDICT AND NOT ON A PARTY BY PARTY BASIS.

Plaintiffs Apodaca, a family of four, sued for injuries they each sustained in a rear-end automobile collision. In compulsory arbitration plaintiffs were awarded damages, $33,198.90 to Jesus, Sr.; $27,439.50 to Christina; $19,478.00 to Jesus, Jr.; and $16,492.00 to Maria. The arbitrator also awarded $510.78 in taxable costs, for a total arbitration award of $97,119.18. Defendant appealed and at in a trial de novo admitted liability. The jury awarded $27,739.00 to Jesus Sr.; $19,939.00 to Christina; $10,418.00 to Jesus, Jr.; and $7,392.00 to Maria. The superior court awarded the Apodacas, as the prevailing parties, their taxable costs of $7,529.73, bringing their total award to $73,017.73.

 Plaintiffs then moved for sanctions under rule 77(h) Ariz. R. Civ. Proc. which provides that on appeal from compulsory arbitration, the appealing party must obtain a result 23% better than the arbitration award or be subject to sanctions to pay attorneys' fees, expert witness fees and taxable costs. Plaintiffs argued here that the awards for Jesus, Sr. and Christina were not 23% more favorable to the defendant than the arbitration award. Applying the Apodacas' proposed party-by-party analysis, the superior court found that the defendant did not meet the Rule 77(h)'s 23% threshold to avoid sanctions as to Christina and Jesus, Sr. The court then entered a final judgment, which included the Apodacas' damages, taxable costs, and an award of $30,593.25 in Rule 77(h) sanctions in favor of Jesus, Sr. and Christina. The Rule 77(h) sanctions were comprised of expert witness fees, attorneys' fees, and taxable costs for the trial. The Arizona Court of Appeals affirmed as modified.

 The court of appeals found that because the plaintiffs brought one lawsuit and received a single arbitration award and the superior court conducted a single jury trial followed by the issuance of one judgement, the plain language of Rule 77(h) required a comparison of the total arbitration award to the total judgment. Because the difference between the judgment and arbitration award was 24.8%, the defendant met the 23% threshold to avoid the award of sanctions. The court noted that had individual plaintiffs had claims against other plaintiffs or if there had been multiple defendants attempting to shift liability among themselves, the result might have been different. The trial court's judgement is affirmed but the sanctions are stricken.

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About the Author

Ted A. Schmidt

Ted's early career as a trial attorney began on the other side of the fence, in the offices of a major insurance defense firm. It was there that Ted acquired the experience, the skills and the special insight into defense strategy that have served him so well in the field of personal injury law. Notable among his successful verdicts was the landmark Sparks vs. Republic National Life Insurance Company case, a $4.5 million award to Ted's client. To this day, it is the defining case for insurance bad faith, and yet it is only one of several other multi-million dollar jury judgments won by Ted during his career. He is certified by the State Bar of Arizona as a specialist in "wrongful death and bodily injury litigation".

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